October 19, 2000 | Read Time: 12 minutes
Independent Sector reassesses goals, vows to be leader on charity policy
When the membership group Independent Sector speaks, its words carry the
weight of more than 700 nonprofit groups, foundations, and corporate grant makers, including the Salvation Army, Ford Foundation, and Coca-Cola Company, and many of the other biggest names in philanthropy.
But while the coalition charged with building recognition for the nonprofit world among politicians, business leaders, and the rest of the public has earned much praise over its 20-year history, it has also drawn criticism for not using the clout of its diverse membership to more effectively shape the nation’s policies and priorities for nonprofit groups.
Now Independent Sector is poised to undertake a major makeover of its goals and internal structure aimed at strengthening its role as a public-policy leader. The organization’s members will be asked to approve the change, which was honed during extensive meetings with members, nonmembers, and representatives of government, when they gather here next week at Independent Sector’s annual conference.
Sara E. Meléndez, president of Independent Sector, says the coalition’s new approach is designed to make the organization “more aggressive and flexible and nimble and faster in not just responding to policy issues that are brought up by others but in leading the sector in new directions.”
Already the organization has started to think about what it wants from presidential and Congressional candidates. It just released a report outlining six nonprofit issues it is urging politicians to consider, such as increasing federal funds for the Internal Revenue Service’s charity regulators to ensure accountability and allowing people who do not itemize on their tax returns the financial incentive of a charitable tax deduction (The Chronicle, October 5).
Fred Grandy, the former member of Congress who is president of Goodwill Industries International and a member of Independent Sector’s board, says the goal is to get politicians to consult groups like Independent Sector before proposing changes to the tax code or other moves that could influence charitable giving. “We want the same kinds of opportunities that the business or labor communities frequently have when business or labor law is being written,” he says.
But Pablo Eisenberg, a senior fellow at the Georgetown University Public Policy Institute, questions whether Independent Sector can make the kinds of changes he believes will be necessary for the coalition to increase its influence with policy makers. The group’s plans sound “very nice,” he says. “But will the organization have the courage and leadership potential to do them?”
A Diverse Collection
The changes at Independent Sector could have big consequences for the nation’s charitable organizations. If the membership group is able to take tough stands and enjoy greater sway with politicians, it could play an important role in the passage of measures aimed at expanding charitable giving and increasing nonprofit accountability.
But if Independent Sector’s efforts fail to win enough support or if the organization loses members as a result of controversial positions it takes, some nonprofit leaders worry that it may be a sign that no organization can effectively take a leadership role representing a diverse collection of grant makers and nonprofit groups.
Peter B. Goldberg, president of the Alliance for Families and Children and chairman of Independent Sector’s board of directors, says it is essential to have an organization like Independent Sector to speak out about the shared goals and interests of all tax-exempt groups, particularly as government, corporate, and nonprofit groups increasingly start to resemble one another. “We need to preserve our unique values and articulate our value to American society,” he says. “I don’t think it’s good for society if we become indistinguishable from each other.”
Mr. Goldberg says Congressional efforts several years ago to prohibit nonprofit groups that receive federal money from conducting advocacy campaigns helped pinpoint Independent Sector’s strengths and weaknesses. “We weren’t prepared for that fight before it hit,” he says. “But the sector also really rallied around the challenge, which was extraordinarily gratifying. The key is we never want to be caught short like that; we want to have our radar out there to anticipate those kinds of issues earlier.”
Independent Sector’s new structure means that the group will put less emphasis on leadership training and publications.
The organization is spinning off one key part of its educational efforts — its project to educate charities about how to take nonpartisan stands on issues related to their missions while still complying with lobbying laws — into a new charity run by Bob Smucker, a 20-year veteran of Independent Sector.
Under Independent Sector’s new structure, all of the organization’s operations, from its research and its publications to its annual conference and its public-policy lobbying, will be more closely linked and focused on immediate and future policy matters for nonprofit groups.
To anticipate issues of importance to charities, Independent Sector is taking several steps, including the creation of a Policy Institute or internal think tank. The institute will review and assess research done by others and sometimes conduct and commission its own research.
Says Ms. Meléndez: “When we have a question about an issue that may be in need of a policy from us at the federal or state level, this institute can pull together everything that is known about the issue, do some quick analysis, and convene the right policy players to talk about it. Then we will have enough information to make a decision about whether we want to develop and promote it.”
While Independent Sector has always tried to fight for charities when important issues arise in Congress, says Peter Shiras, the coalition’s senior vice president for programs, it will now try to be more successful at anticipating issues and acting on them quickly.
“On public-policy issues, we have been extremely good at scoring touchdowns on intercepted passes — on defense — but we need to be a lot better moving the ball down the field on offense,” says Mr. Shiras. “We’ve reacted to other people’s agendas as opposed to saying, ‘What do we think should be done to change tax laws to enhance and encourage charitable giving or advocacy by nonprofits?’”
Independent Sector plans to hire a new vice president to run the policy institute and another person to fill the newly created slot of vice president for public affairs, who will oversee a new office that combines the coalition’s current lobbying efforts with its communications department. That move, officials say, will allow the coalition to better get across its message, and will result in greater use of technology, such as e-mail, to alert the group’s members and the public to important news.
And the organization has created the position of vice president for strategic outreach, a slot that will be filled by the coalition’s long-time communications official, John Thomas. In his new role, Mr. Thomas will be charged, among other things, with forming new ties with groups that Independent Sector has not worked with before, including labor unions, religious groups, research organizations, government agencies, and others.
Independent Sector is also considering whether to open an office on the West Coast soon, and eventually perhaps add offices in the South and Midwest, to better work with its members.
‘Smart People’ and Money
For Independent Sector’s plan to work, the organization will need “brain power over time, which means money,” says Harvey P. Dale, a New York University tax-law professor who has served on Independent Sector committees over the past 10 years. He adds: “Independent Sector’s going to have to create a structure into which it can attract and hire really smart people who will be able to understand fairly complex issues to do the kind of data collection and legal and historical research needed to prepare thoughtful analyses on timely topics and then be able to translate that work for the appropriate audiences, whether it be state attorneys general or House committees or staff of the Treasury Department.”
To accommodate its new vision, Independent Sector expects to increase the number of its employees from about 35 to 40.
It hopes to increase its budget by 50 percent over the next five years, from $6-million to $9-million. Membership dues last year represented about $2.4-million, or 25 percent of total income, with grants from foundations and corporations providing much of the remainder.
To raise the extra money, Independent Sector will press more foundations to give. “There is a very small number of foundations that fund the kind of work we do,” says Ms. Meléndez. “A lot will fund education and culture and teenage anything, but research or advocacy in the nonprofit sector? That’s not within the priorities of many foundations.”
Independent Sector also plans to raise more money by reviving a membership program for individual members called “associates.”
Increasing donations from organization members will also be a challenge. According to Independent Sector, the coalition’s membership peaked at more than 800 organizations in the early 1990’s following a big membership drive. But keeping membership at such a level has proven difficult. Since 1995, the number of members belonging to the coalition has fluctuated between 725 and 775, and is currently 740.
A few big names are missing from Independent Sector’s roster, including the American Lung Association. John R. Garrison, who heads that organization, says he very much supports Independent Sector and its mission. But his group dropped out, he says, because it did not have enough money in its budget to pay the group’s membership fees after paying its dues to several health-related advocacy organizations. The coalition’s dues range from $250 to $10,500, depending on an organization’s size.
The new plan is being hailed by many as a step in the right direction. But others are skeptical of its chances for success, particularly given similar attempts to refashion the national coalition over the years.
Gary Bass, executive director of OMB Watch, a Washington group that monitors government spending, says the organization was nowhere to be found when Congress recently considered and passed legislation that would have repealed the estate tax. President Clinton eventually vetoed the legislation, but Independent Sector did little to stop the measure, says Mr. Bass, which many charity leaders have said would have cost philanthropy millions of dollars in lost gifts if enacted.
“Independent Sector was superfluous in that fight,” he says. “It wasn’t even worth my time and energy to focus on Independent Sector.”
But Mr. Grandy of Goodwill International says the coalition has been wise “not to get into a lot of issues that might divide the sector or whipsaw it into a political fight.”
The issue of the estate tax, Mr. Grandy says, proved to be “a really thorny matter that we couldn’t quite come to closure on” when the organization was making its recommendations to presidential and Congressional candidates. Some members worried that there was not strong enough research to back up the view that giving would be hurt by the repeal of the tax. Others feared alienating politicians or wealthy donors who supported the repeal. And some were wary about getting drawn into a philosophical and partisan debate about the best way to use the resources of the rich to help the poor.
In its recommendations, Independent Sector ended up simply saying that the next president and Congress should “recognize that the estate tax has a significant impact on charitable giving through bequests.” Mr. Grandy says that if and when a move to repeal the tax resurfaces Independent Sector would revisit that decision and bolster its research about the effects of such a repeal.
Structure and Leadership
The debate over the best role for Independent Sector to play has been a long-running one. Since its beginning, the organization has been torn over whether to maintain a relatively low-key approach of winning consensus among members about priorities or whether to be more assertive and willing to take risky positions.
Many observers question whether Independent Sector’s very nature will prevent it from ever playing a very strong leadership role in shaping policies because it represents such a loosely connected group of organizations.
Questions have also been raised by some about whether the organization needs a new president with a higher profile to take the coalition through its next stage of development.
Ms. Meléndez was a controversial choice when she was named president of Independent Sector in 1994 following the 14-year tenure of founding president Brian O’Connell. Many at the time endorsed the selection of Ms. Meléndez, who had been president of a Washington association that represents foreign-language teachers, as someone who would have particular insights into helping nonprofit groups of all sizes while working to provide opportunities for Latinos and other minorities. But others thought Independent Sector should instead have secured the services of someone with more name recognition and experience.
Today, Ms. Meléndez says she lets criticism “roll off my back.”
“I’ve just worked my heart out to do the best job that I could,” she says. “I suppose some of those people may now be saying, Well, she wasn’t so bad. But I also suppose some people would probably see me walking on water and say, See, I told you she couldn’t swim.”
Ms. Meléndez and other key officials of Independent Sector make clear that the organization is now ready to be bold as it enters its third decade.
“We’ve heard: Take the moral ground, speak out, take risks, lead,” says Ms. Meléndez. “We’ll see what happens when we do.”
Purpose: Created in 1980, the coalition seeks to promote, strengthen, and advance the nonprofit sector so that, according to its mission statement, “it may foster civic engagement through private initiative for the public good.”
Membership: About 740 corporations, foundations, and nonprofit groups.
Finances: Spent $5.4-million in 1999 for programs and $971,377 for administration.
Sources of funds: In 1999 received $5.8-million from contributions and grants; $2.4-million from membership dues; $633,377 from government fees and contracts; and $402,777 from investments.
Key officials: Peter B. Goldberg, chair; Sara E. Meléndez, president.
Address: 1200 18th Street, N.W., Suite 200, Washington 20036; (202) 467-6100.
World Wide Web site: http://www.independentsector.org
